X4 Pharmaceuticals, Inc. (XFOR) Q4 2019 Earnings Report, Transcript and Summary

Greetings and welcome to X4 Pharmaceuticals Fourth Quarter and Full Year 2019 Business Highlights and Financial Results Conference Call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Candice Ellis, Director of Corporate Communications and Investor Relations at X4. You may begin.

Thank you, Kevin, and good morning everyone. Thanks so much for joining us. As we provide a recap of our key activities during 2019 and discuss our strategy and upcoming milestones for 2020. Presenting on today’s call will be our Chief Executive Officer, Dr. Paula Ragan; our Chief Medical Officer, Dr. Lynne Kelley; and our Chief Financial Officer, Adam Mostafa. Following prepared remarks by each we will open the call to your questions. As a reminder on today's call, we will be making forward-looking statements regarding our regulatory and product development plans as well as our research activities. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found in our most recent Form 10-K on file with the SEC. I'd now like to turn the call over to our Chief Executive Officer, Dr. Paula Ragan.

Thanks, Candice, and thank you everyone for joining us on this call this morning. 2019 was a remarkable year for X4 with significant achievements made across our entire organization. And specifically, achievements that have allowed us to further strengthen our leadership position in the discovery and development of therapies to treat rare diseases, resulting from the dysfunction of the CXCR4 pathway. 2019 saw the debut of X4 as a public company, and we were able to successfully raise more than $150 million during the year to further support our mission. I'd like to take this opportunity to thank our shareholders for their continued support of the company, as well as our analyst who have played an important role in sharing our story. I'm going to focus on our 2019 achievements today, not only to highlight our lead programs but to also provide a framework to discuss our strategy going forward, as well as key upcoming milestones as Candice has mentioned. Importantly, in June of last year, we initiated the pivotal Phase 3 clinical trial of our lead therapeutic candidates Mavorixafor for the treatment of WHIM Syndrome. As a reminder, Mavorixafor is a first in class oral small-molecule antagonist of the chemokine receptors CXCR4, a receptor known to play a key role in enabling the healthy trafficking of immune cells and expected surveillance. We’re actively dosing patients in the Phase 2 trial and an enrollment is on track to be completed in the second half of 2020. Lynn will discuss the trials in more details in a moment but we remain on tracks to report top line data from our global study in the second half of 2021. During 2019, Mavorixafor was granted breakthrough therapy designation by the FDA for the treatment of WHIM, which we believe not only highlights the severity of the disease, but also the strength of our Phase 2 data. As you may know, breakthrough therapy designation is granted to facilitate the development and regulatory review of an investigational new drug. There are two key components required to support breakthrough designation. The first being that the drug is intended to treat a series or life threatening condition where there is an unmet need. And the second is preliminary clinical evidence that demonstrates the drug may provide substantial improvements over any available therapy. We are very pleased at the FDA recognized Mavorixafor's potential to treat WHIM Syndrome as a serious or life threatening disease with its grant of breakthrough therapy designation. We also received orphan drug designation from the European Commission for Mavorixafor in WHIM in 2019, having already received orphan designation in the U.S the prior year. During the year, we also completed scientific advice with the EMA, aligning the WHIM Phase 3 registration trial globally. On April 7, we will be holding an Analyst Day, which will also be webcast to provide a deeper look into WHIM Syndrome. We will discuss the WHIM patient experience and severity of the disease. Have an opportunity to hear directly from a leading KOL, who treats patients and provide an update on the prevalence of the disease. Then mid-year, we plan to announce additional data from the open label extension portion of our WHIM Phase 2 study, including updates to clinical infection rates in Warburton. In addition, in 2019 we initiated two Phase 1b studies examining the safety and tolerability of Mavorixafor in addition to certain efficacy measures, one and a treatment of severe congenital neutropenia or SDN and the other and Waldenstrom macroglobulinemia. We anticipate initial clinical data from both of these proof of concept trials in the second half of 2020. Lynne will provide additional detail regarding both of these trials in just a moment. Related to our efforts to treat long-term in May of last year, Mavorixafor was selected for investment by the Leukemia and Lymphoma Societies therapy acceleration program or TAP. TAP is a strategic initiative of the LLS that creates alliances to speed the development of carefully chosen new therapies for blood cancers. This collaboration focuses on accelerating the development of Mavorixafor for the treatment of patients with this rare form of Non-Hodgkin's Lymphoma. In 2019, we also entered into the solid tumor oncology development and commercialization agreement with Abbisko Therapeutics in greater China to develop and commercialize Mavorixafor in combination with checkpoint inhibitors or other agents in solid tumor oncology setting in that region. And just last month, we were granted a new competition of Matter Patents on Mavorixafor that we expect will provide exclusivity on the compound through 2038. Further enhancing our patent portfolio and extending our potential commercial horizon. On the governance and leadership front, we were able to significantly strengthen our Board of Directors adding Dr. Rene Russo, Mr. David McGirr, Dr. Murray Stewart and Mr. William Aliski to the Board. All of whom have significant leadership experience and impressive record of success at public life science companies. We also sold several key positions in-house, including our Chief Medical Officer, Dr. Lynne Kelley, who is guiding and overseeing our clinical programs, our General Counsel, Derek Meisner, who brings broad experience at public companies, as well as the SEC. And our Senior Vice President of Research and Development, Dr, Renato Skerlj, who's an expert in CXCR4 biology working to strategically expand our research efforts, also managing our research facility in Vienna, Austria. Additionally, we recently enhanced our patient efficacy efforts with the hiring of Michelle Ray, our Vice President of Patient Affairs and Patient Efficacy to bring critical expertise and understanding in the rare disease business. I'm now going to turn the call over to our Chief Medical Officer, Dr. Lynne Kelley to discuss our clinical trial progress. Lynne.

Thanks, Paula, and good morning, everyone. As Paula mentioned, we were able to make significant progress in the advancement of our clinical efforts during 2019. In the middle of 2019, we initiated a pivotal Phase 3 clinical trials of our lead therapeutic candidate Mavorixafor for the treatment of WHIM Syndrome, which is a rare, inherited primary immunodeficiency disease caused by genetic mutations and CXCR4 receptor gene. Our Phase 3 trial, which we granted for WHIM is a global 52-week randomized double blind placebo controlled multicenter study designed to evaluate the safety and efficacy of Mavorixafor in genetically confirmed WHIM patients. We expect to enroll 18 to 20 subjects in approximately 20 countries, followed by an open label extension trial. We expect to complete full enrollment in the second half of this year, and we continue to expect top-line results from the 4 WHIM trial in the second half of 2021. As Paula mentioned earlier, we recently initiated 2 additional clinical trials, both proof-of-concept Phase 1b trials of Mavorixafor. One in patients with severe congenital neutropenia, which is a group of rare blood disorders characterized by abnormally low levels of white blood cells, and the other in combination with the BTK inhibitor Ibrutinib in patients with Waldenstrom's macroglobulinemia, which is a rare form of Non-Hodgkin's Lymphoma. First, I'd like to provide some additional context to our efforts in SCN. This disease often presents as a diagnostic challenge for physicians. And there's an unmet clinical need for targeted treatment options that may be better tolerated than existing therapies. Current treatments are limited to non-specific stimulation of the bone marrow with daily injections of granulocyte-colony stimulating factor, or G-CSF and with the antibiotics given prophylactically or to treat infections. Unfortunately, G-CSF carries with it a high incidence of adverse events. It can cause bone pain, as well as injection site reactions. And in rare instances, high chronic doses of G-CSF have been associated with myeloid dysplasia and acute myeloid leukemia in this patient population. The recently initiated Phase 1b trial is a 14-day trial designed to assess the safety and tolerability of daily, oral Mavorixafor in patients with SCM, and others selected congenital neutropenia disorders. In addition, the trial will evaluate the neutrophil response in this patient population as an independent agent were in combination with G-CSF, comparing neutrophil counts at baseline and at completion. The trial is designed to enroll up to 45 patients in total, given objective experience Mavorixafor, our goal here is to achieve proof of concept to support interactions with the FDA regarding a proposed registration trial. We anticipate initial clinical data from our SCM trial in the second half of 2020. Now, turning to Waldenstrom's macroglobulinemia, a rare form of Non-Hodgkins Lymphoma. In December, we initiated a Phase 1b clinical trial of Mavorixafor in combination with a Ibrutinib in patients with Waldenstrom's macroglobulinemia. The trial will focus is focused on and enroll patients who have acquired a gain of function mutation in the CXCR4 receptor in addition to the MYD88 mutation a hallmark of Waldenstrom's diagnosis. These patients who wish to have a shower response and to take longer to respond relative to the single mutant patients. The Phase 1b multicenter open-labeled dose escalation trial is designed to determine the appropriate dose and to assess the safety and tolerability of Mavorixafor support in combination with Ibrutinib. In addition the trials designed to measure changes in serum in immunoglobulin M or IgM, and hemoglobin from baseline. Both of these biomarkers have key elements in the clinical response in Waldenstrom's patients. The clinical trial is expected to enroll approximately 12 to 18 patients. As Paul mentioned, this trial is being conducted as part of a collaboration with the Leukemia and Lymphoma Society. We anticipate initial clinical trial data from Waldenstrom's trial in the second half of 2020. I'm now going to turn the call over to our Chief Financial Officer, Adam Mostafa to discuss our financial results. Adam?

Thanks, Lynne. And thanks to all on the call today. As we embark upon what we believe will be a very productive 2020. We enter the year in a strong financial position. As Paul mentioned, the possible due to the completion of two successful public stock offerings that raised approximately $150 million and added a Blue Chip Group of knowledgeable and supportive institutional investors. Overall, these financings put us in a strong cash position that is expected to fund our current operating plan into early 2022. That runway excludes any potential cash benefit from warrant exercise proceeds, or any additional borrowings under our debt facility. As for the details of the fourth quarter, and full year 2019, we ended 2019 with the $128.1 million in cash, cash equivalents and restricted cash. This is compared to $77 million as of September 30, 2019 with the increase driven predominantly by our successful $65 million November public offering. Our research and development expenses were $7.1 million for the fourth quarter of 2019 and $30.2 million for the year ended December 31, 2019, as compared to $4.7 million and $20.3 million for the comparable periods in 2018 respectively. Our general and administrative expenses were $3.9 million for the fourth quarter of 2019 and $17.6 million for the year ended December 31, 2019, as compared to $3.4 million and $8.7 million for the comparable periods in 2018 respectively. And we reported a net loss of $10.8 million for the fourth quarter of 2019, and a net loss of $52.8 million for the year ended December 31, 2019 as compared to a net loss of $11.3 million and a net loss of $33.3 million for the comparable periods in 2018 respectively. Note that the net loss of $52.8 billion for the 2019 year includes $3.9 million of non-cash losses related to the sale in process research and development intangible assets. I'll now pass the call back to Paula for concluding remarks, before we open it up for your questions. Paula?

Thanks so much, Adam. As you can see, 2019 was a pivotal year for us. Our first year as a public company, the launch of our Phase 3 registration trials Mavorixafor and WHIM, the initiation of two additional exciting clinical trials that were delivering initial results this year and the strengthening of our balance sheet, our management team and our Board of Directors. This is all an anticipation of a very busy next 12 to 18 months, during which time we will expect to complete enrollment in WHIM see proof of concept of Mavorixafor in additional indications and expand upon our commercial preparation efforts and anticipation of our top line results from the 4 WHIM Phase 3 trial in the second half of 2021. We look forward to updating you on our progress over the coming year and hope you will participate in our upcoming Analyst Day on April 7 for a deeper dive into our focus on WHIM Syndrome. And with that, why don't we open it up to questions, Kevin?

[Operator Instructions] Our first question comes from Stephen Willey with Stifel.

Hey, good morning guys. Thanks for taking the questions. Probably an unknowable answer at this point. But, I'm just kind of curious. You talked about the pivotal 4WHIM trial and this is obviously kind of a global undertaking and there's obviously a lot of investor concern around some of the development timelines with some of the ex U.S., and perhaps even the U.S. hospitals becoming more restrictive with respect to presentation and kind of noncore activity. So just kind of wondering, do you -- how closely kind of are you monitoring your trial sites? And how much cushion do you think is built into your timelines both with respect to completion of enrollment and also just with respect to top line data?

Hi, Steve. Thanks for the question. I think to echo back to your comment is it is unknowable at this point, but all we can say is the WHIM trial is global and we've always tried to mitigate enrollment by having multiple countries open with multiple sites. Its 18 to 20 patients and at this point, we don't see significant impact to that projection. However, things are changing rapidly, as you've stated. So we continue to monitor, we continue to closely connect with our clinicians to make sure that they're still guided appropriately. And at this point we received no in-bound communications that their operations are changing.

And then just I think about the severe congenital neutropenia trial relative to -- I guess the Phase 2 WHIM trial that was conducted. I know that you took your first 24-hour neutrophil evaluation, I think in the Phase 2 or week 5, and I know here, you're doing it that week 2. So, can you just talk a little bit about the time to steady state and just whether or not you think 2 weeks of exposure? And what I guess a fundamentally different genetic disease is sufficient to have an impact on neutrophils?

Yes, this is, Lynne. We do. So the 14 day time period for the clinical study. One of the things that is based upon is the knowledge that steady state is reached for drug based upon the pharmacokinetics in about 7 days. And so it also is informed by our healthy human volunteers study previously that demonstrated that was the time period to expectation. So the reason for the trial being at length is -- it is a informed trial in trying to evaluate those patients with a broad variety of etiology for the congenital neutropenia first identifying to genetic profiling, and then also identifying their response.

And then maybe just lastly, I know, we haven't seen obviously anyone's from state yet. But have you guys given any preliminary thought as to what a registration pathway in this setting might look like? And do you think that, because of the targeted nature, here that you could get away with, I guess a single arm trial or do you think you would, perhaps need to run something more like a small randomized study head-to-head versus BTK?

I think that all those are still to be determined. We really need to get the data from the Phase 1b trial. And we're in close communications with the agency about expectations. But I'd say we are evaluating all of our options.

Do you think in general, they're just to add to one point? Other companies have always had to run competitor arms of active. So that is our current expectations. And that's how we're sort of opening about long-term planning. However, the Phase 1b data will inform how we can approach the agency with anything that might be different from where others have come.

Next question comes from Arlinda Lee with Canaccord Genuity.

I was wondering what data actually saw when they granted that as opposed to what we might be seeing in terms of the update. And as well, if you could provide additional color on how enrollment has been going on your pivotal? Thank you very much.

Hey, Arlinda, this is Lynne. So as I mentioned earlier, we're excited for the breakthrough designation. I think, the recognition by the agency, the treats, it's applicable to WHIM being a serious potentially life threatening condition. And as you spoke the preliminary clinical evidence, we were able to share with the agency the Phase 2 data, as well as looking in depth at some of the infection issues, and that is part of the information we're looking to share later on this year broadly. And that was what their basis of their determination was for the designation.

Okay, great. And then I guess maybe as a follow-up. How common is testing for the double mutant. I think you've previously mentioned a third or some of the population is double mutant. And I'm curious how that's been reflected in your enrolment process.

Yes, it's been increasingly recognized as a very important marker for how the patient responds to treatments. And so a number of our centers of excellence, the ones that we're working with actually routinely are doing that genetic testing for patients who come in with a primary diagnosis algorithm for Waldenstrom's. And then also for those patients who may not come in part of the clinical trial is we include that screening criteria with the genetic testing for the double mutations. So consistently in the literature is the 30% 40%.

Okay, great. Thank you very much.

The next question comes from Marc Frahm with Cowen.

Yes. Thanks for taking my questions. First just on the [Indiscernible] It is early in the enrollment for SCN and Waldenstrom's. The updates we expect to hear the end of the year, you are ultimately in charge of being do design to have discussions with regulators has pivotal has. Is the data that we will see later in the year you think going to be enough to have those discussions? Or you going to need more follow-up, more patients than what someone will likely to see given where enrollment is?

So hey, Marc, this is Lynne again. So the expectation for the Waldenstrom's trial is 12 to 18 patients. And then remember that a 6-month clinical trial currently enrolling. And the really the -- the goal of that trial was the dose planning portion, as well as the safety with Ibrutinib. Also looking the biomarkers are not a burden for the patient to obtain easily gotten. And we will be using that to help inform. But our expectation is to share the preliminary data, most likely by the second half of 2020.

Okay. And then, can you give an update it wasn't in the press release just on the status of the next generation molecules for 002 and 003? And just working their way towards findings?

Yes, thanks, Mark. I appreciate the interest. So 02 and 03 are making nice progress towards IND-enabling studies. 03 is sort of the leader in the pack at this point. And we do expect to initiate IND enabling studies this year.

Our next question comes from Joel Beatty with Citi.

Hi, thanks for taking the questions. The first one is on WHIM Syndrome. Could you discuss the patient identification efforts? You're currently used for both the trial as well as what's in the community and could be used upon approval SCN

Sure, thanks for the question. So there's different approaches for patient identification in terms of those for the trial. We have sort of obviously our broad network of clinicians and sites that have been instrumental in building the funnel to support patient enrollment. So I think that's it's sort of a near-term approach that is very relationship driven and we're in good shape to complete enrollment by the end of the year through those mechanisms. In the longer term sort of broader sense and in terms of registries and preparing for our hopeful ultimate approval for Mavorixafor we've been taking similar approaches to as other rare disease companies where we're working with existing genetic databases or doing electronic medical records research, primary market research as well as using some targeted field force efforts with our MSL. So we'll be able to get an update on some of that at the April 7 Analyst's Day. And we do feel, it continues to support our current guidance around the thousand genetically confirmed when patients in the U.S, and certainly feel like there's potential beyond them.

Great. And then oppression on dosing and differences in dosing between indications. Did you get a sense of what you anticipate the highest dose? Or dosing could be for Waldenstrom's compared to other indications like WHIM and SCN? Or is it too early to have a sense of that.

Hey Joel, it's Lynne. I think it's too early to have a sense of that. I think we chose the dose for the Waldenstrom. The Waldenstrom's is the dose escalation, the 200, 400 and 600. And in the WHIM we use the Phase 2 data to inform using the 400 doses, the responsiveness for those patients that were on trial.

Our next question comes from Swayampakula Ramakanth with H.C. Wainwright.

This is RK from H.C. Wainwright. Good morning, Paula, good morning, Lynne. Regarding your Analyst Day on April 7, what should we expect to be discussed there? And I think it's going to be webcast to rights.

Correct. So the expectation is that it's focused on WHIM Syndrome. We will share a patient experience via video, so people can have a firsthand understanding of what it feels like to live with WHIM Syndrome. We will share our KOL views and experiences treating the disease as well as some of his experiences with our Phase 2 study. And then we will be providing guidance on some additional market research around prevalence.

And then regarding, the total study, what could we hear from you in terms of data? While they wait for the study is really to get to completion in the second half 2021. What sort of updates could we get from you folks?

So, as it's a prospective randomized double WHIM trial, there's no expectation of release of that data until really completion of the trial. And then for we will be sharing data around the Phase 2 and the extension portion of the Phase 2 in the 2020 time period.

Our next question comes from Alex Heller with Oppenheimer.

Hi, good morning. This is Alex Heller [indiscernible]. Thanks for taking my question. Are you able to share any updates on the diagnosis rate partnership?

Thanks for the question. We're still in progress with collating all of the data, and so I think at this point we just want, we're not going to be give guidance specifically on the results from MBTA, but we certainly recognize that's an important tool and the overall diagnosis of SCN and WHIM. So we'll provide guidance as we'll provide guidance on when you can expect that as forthcoming discussion.

And then any update on your thoughts on in your commercial strategy?

So I think, again, as a rare disease focused company, we intend to globally commercialize in the primary immunodeficiencies, dertainly WHIM and FMB nicely from a strategic sort of call point and synergy perspective. And then with respect to low terms, again, it's relatively targeted, specialist group. So our intention at this point is to go alone. But we will always be considering how to best grow the company as the day unfolds and as we better understand the global commercial landscape.

Our next question comes from Zegbeh Jallah with ROTH Capital Partners.

I just kind of couple of questions. I think the first one is Waldenstrom's haven't been able to find any details on the study. But just had a question about the potential sequencing of the burden with Mavorixafor. Are you praying with that, in terms of the sequencing of events to prevent any kind of resistance? And then second question is that the Waldenstrom study is enrolling our patients pretreated with the Ibrutinib, I would imagine that to be easier to enroll relative to WHIM. So, any update on the enrollment there. And then lastly, any learning from Beijing as well to sort of study and I know you said that you're looking forward to 2H '20 for the readout of the study of the 42 biomarker. I was wondering, if you're aiming for any clinical meeting in the second half of the year?

So I'm going to try to answer all your questions going forward. So I think, first of all to you clarify this patient did population for the Waldenstrom's trials both de novo patients and recurrent refractory, but patients would not have seen Ibrutinib prior to our trial. And so that is an important point. We are keeping the Ibrutinib dose steady and we are -- the dose escalation is for Mavorixafor. And so we are well aware of the expectations for that and we have the design of the trial. And then we are looking to share the results of preliminary results at second half of 2020. And we're not commenting on any specific targeting meetings. We're in the process of enrollment, and so it would be premature to say that.

And just I have a quick clarification. I think you said that after the R&D perhaps you'll be providing additional updates from WHIM study decline on some of the sequence that data is not going to promote the R&D days by that a little bit later?

So there'll be no new data at the Analyst Day on April 7th. Mid-year as Lynne mentioned, we do have additional data that, some of the question about what the FCA get to see to grant this breakthrough. So we intend to share that information with respect to infection rates, and additional clinical assessments to help the general public understand the full data set by mid-year this year.

And I'm not showing any further questions at this time. I'd like to turn call back over the Paula.

Thank you so much, everyone. We really appreciate your time today. And if you have any further questions, please do not hesitate to reach out to Candice. We'll do our best to always support your interest in X4. Thank you so much and have a great day.

Ladies and gentlemen, this concludes today's presentation. You may now disconnect and have a wonderful day.